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Japan's economy emerges from recession, growth weaker than forecast

Mon, Feb 16, 2015 - 8:12 AM

Japan's economy slid into recession in July-September last year, prompting Mr Abe to delay a second sales tax hike initially scheduled in October 2015.

PHOTO: BLOOMBERG

[TOKYO] Japan's economy rebounded from recession to grow an annualised 2.2 per cent in the final quarter of last year, giving a much-needed boost to premier Shinzo Abe's efforts to shake off decades of stagnation even as the global outlook deteriorates.

But the expansion was smaller than a 3.7 per cent increase forecast in a Reuters poll, suggesting a fragile recovery for the world's third-largest economy as consumer mood remained soft and uneven global growth weighed on exports.

Still, the return to growth will allow the Bank of Japan to hold off on expanding monetary stimulus in coming months, even as slumping oil prices push inflation further away from its 2 per cent target, analysts say.

The data will be one of the key factors the BOJ will scrutinise at its two-day rate review ending on Wednesday, where it is widely set to maintain the current pace of asset purchases in its monetary stimulus programme.

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The preliminary reading for gross domestic product (GDP), which translates into a quarter-on-quarter increase of 0.6 per cent, follows two straight quarters of contraction blamed on the hit on consumption from a sales tax hike last April.